Financial Betting Articles

A pound of flesh - Here's the scoop - liquidity ran dry on the international credit markets at the end of the week and central banks had to swoop in to halt the panic, doling out wodges of £50s left right and centre. Anyone who thought the global credit crisis was a blip now has enough egg on their face to make a tasty family-size omelette. To crow would be churlish so here goes - I TOLD YOU SO! The credit markets are more complicated than quantum physics so you better believe we haven't heard the last of this one. All the major markets fell out of bed and there was plenty of opportunity to make cash-money if you had your head screwed on right.

The reason the problem in the credit market is rumbling on is that there is a very tangled web out there. Luke borrows from Peter to pay Paul, who doubles his leverage by selling commercial paper to Matthew, which he uses to buy high yielding sub-prime debt from Mark. Confused? You should be. What matters is that the sub-prime gold turns out to be lead and you can't shift it for love nor money. What starts at one end with ordinary folks not being able to pay their mortgages, ends at the other with big banks not being able to shift debt to each other. The upshot is that they don't want to extend yet more credit to finance private equity takeovers, so share prices aren't boosted by buyout frenzy. It's one hell of a chain reaction and one that will take some time to work itself out.

What we are experiencing is a financial crisis and not an economic one as such. But that could all change as all these factors feed back in to the system. Call me geeky but that is what makes economics so fascinating. In the simplest terms, if consumers get wary and lose confidence as a result of equities taking a nose dive and general uncertainty, they may stop spending. If that happens then the economy could really hit the rocks. The resulting bad news reinforces the process and it becomes a self-fulfilling prophesy.

But financial bettors like you and I aren't going to let ourselves get bullied by the market bears - we'll kick the sand right back in their faces! We're ready to punt the market up down or sideways, then kick back in the sun while a former BNP Paribus hedge fund manager mows the lawn.

A fool and his money are soon parted. All the fools are taking long term positions - be a smarty on the shorter markets on ChoiceOdds and make your feelings felt.

The last major FTSE sell of in May 2006 saw the FTSE fall 595.1 ticks in 9 trading days. In comparison the FTSE has taken 20 days to shed 678.4 ticks this time.

Since May 2003 there have been only 4 days when the DOW has shed more than 2% - three of these are in the last three weeks.

US analysts believe $300bn of debt is at risk of default.

Carrots are orange because they were breed to be so out of loyalty to William of Orange.

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